The government will work out the modality today to facilitate the transfer of the Tk5,000 crore funds offered by the prime minister last week for coronavirus-affected export-oriented industries, a senior finance ministry official said.
"The government will deposit the money in the banks and the affected exporters will be able to avail it at two percent interest. However, the money must go to the workers' accounts directly," said Md Habibur Rahman, additional secretary of the finance ministry.
"This is a very soft loan and the repayment period will be three years, including a grace period," Rahman said.
The interest rate, which exporters must pay to avail the funds, will be banks' operating costs.
"Three ministries – of commerce, finance and labour plus employment – have started identifying affected industries and modalities to lend the funds," said Commerce Secretary Dr Jafar Uddin.
However, Bangladesh Bank has not been informed of the decision to channel the money through the banks.
"The finance ministry has not yet shared its idea of channelling the funds through the central bank," SM Moniruzzaman, deputy governor of Bangladesh Bank, told The Business Standard.
Also, the issue might be discussed at a high profile meeting at the Prime Minister's Office today, sources said. Representatives of the finance and commerce ministries and the central bank are expected to attend the meeting.
The meeting will also discuss the impacts of Covid-19 on the overall economy, an official of the finance ministry said.
Bangladesh's ready-made garment industry, which accounts for 84 percent of total exports – worth $40 billion in 2018-19 – has been hardest hit by the economic fallout from coronavirus. When the virus became an epidemic in January and February in
China, Bangladeshi exporters faced lack of raw materials – most of which come from China.
Later, the epidemic turned out to be a pandemic and disrupted European and the American economies, which are the markets for 70 percent of Bangladesh's exports. Exporters have been facing cancellations of orders of up to nearly $3 billion as of yesterday.
Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, also knows that the Tk5,000 crore fund will not be a grant.
"It is not a grant, it is a fiscal package in the form of a loan to the garment sector," Rubana said.
How the funds will be distributed among the workers has not yet been finalised, she said.
According to BGMEA, the apparel sector has 41 lakh workers and their monthly wages total around Tk4,000 crore a month.
She said most of the factories currently pay their workers through mobile financial services and banking channels.